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2021 (4) TMI 664 - AT - Income TaxEstimation of income - Bogus purchases - case of the assessee was reopened by the A.O on the basis of an information received from the office of DGIT(Inv.), Mumbai that as per the incriminating documents unearthed in the course of the search proceedings conducted under Sec. 132(1) on certain entities engaged in the business of providing accommodation entries/bills, the name of the assessee had surfaced as a beneficiary that had obtained accommodation purchase bill - HELD THAT:- We are of the considered view that it can safely be concluded that the assessee had purchased the goods under consideration, though not from the aforementioned party viz. M/s Moulimani Impex Pvt. Ltd, but from the open/grey market - addition in the hands of the assessee is liable to be restricted only to the extent of the profit which it would have made by procuring the goods at a discounted value from the open/grey market. Insofar the quantification of the profit from making of the impugned purchases is concerned, we find that in the case of Pr. Commissioner of Income Tax-17 Vs. M/s Mohhomad Haji Adam & Company [2019 (2) TMI 1632 - BOMBAY HIGH COURT] while upholding the order of the Tribunal, had observed, that the addition in the hands of the assessee as regards the bogus/unproved purchases was to be made to the extent of bringing the G.P rate of such purchases at the same rate as that of the other genuine purchases. Addition in respect of purchases which were found to be bogus in the case of the assessee before them, a trader, was to be worked out by bringing the G.P. rate of such bogus purchases at the same rate as that of the other genuine purchases. We, respectfully following the aforesaid judgment of the Hon’ble High Court direct the A.O to restrict the addition insofar the bogus/unproved purchases in the case before us is concerned, by bringing the G.P rate on the amount of such bogus purchases at the same rate as that of the other genuine purchases. Needless to say, the assessee in the course of the ‘set aside’ proceedings shall furnish the requisite details before the A.O, who shall after making necessary verifications restrict the additions in terms of our aforesaid observations. The order passed by the CIT(A) is set aside and the matter is restored to the file of the A.O for the limited purpose of giving effect to our aforesaid directions. Appeal of the assessee is partly allowed for statistical purposes.
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